Used-vehicle shortage will keep prices strong

Used-vehicle shortage will keep prices strong

Arlena Sawyers  Automotive News -- December 21, 2009 - 12:01 am ET
The industrywide shortage of used vehicles is expected to continue into 2010, keeping prices strong and relatively stable, used-vehicle experts say.

"Indications are that demand is picking up from the dealers," says Tom Webb, Manheim's chief economist. "All in all, dealers seem to be bidding pretty aggressively."

Webb says used-vehicle prices typically increase in the first quarter as dealers buy inventory in anticipation of a spring selling season fueled by consumers' income-tax refunds.

Not counting seasonal adjustments, "there could be some slight upward movement" in used-vehicle prices early next year, he says.

In November, the average used-vehicle price was $9,519, up 0.6 percent from the October 2009 average price and 9.3 percent from the November 2008 price, according to data compiled by ADESA Analytical Services.

Full-sized pickups and large SUVs -- whose prices plunged last year when gasoline prices exceeded $4 per gallon -- registered monthly and yearly gains in November.
The average price of full-sized pickups last month was $11,122, a gain of 0.2 percent from October 2009 and up 19 percent over November 2008.
Tom Kontos, executive vice president of customer strategies and analytics at ADESA, says the used-vehicle consumer price index in October rose year over year for the first time since June 2008.

He says that indicates that retail used-vehicle demand is strong enough for dealers to pass along the cost of higher-priced wholesale auction purchases to their retail customers.
Ricky Beggs, managing editor of the Black Book used-vehicle price guide, says he expects prices to dip through the end of the month, in lock step with a reduction in auction attendance, purchases and the number of vehicles offered for sale during the holidays.
Although consumers are still wary of the economy, Beggs says he thinks that pent-up demand exists for used cars and trucks and that the overall supply will be tight.
He adds: "In 2010 I expect the market to be positive and active and offer good value for the product."

You can reach Arlena Sawyers at asawyers@crain.com
Source Automotive News